California may lose Native American Gambling Income

The case was originally filed by the Rincon Band of Luiseno Mission Indians in 2008, and claimed that California’s profit-sharing arrangement with the local tribes constitutes a form of taxing. The court also ruled that the State can’t force Indian tribes to share gaming revenues to repair that state’s budget problems. The Indian Gaming Regulatory Act (IGRA) passed by the congress in 1988, prohibits states from taxing Native American tribes and reservation inhabitants.

The U.S. Supreme Court’s decision allows tribes to decrease or eliminate their profit-sharing with the State. Tribes would only contribute to local communities and pay for basic services such as road maintenance, law enforcement, and fire protection, but they can now stop making payments to the State. Currently, North American tribes operate 51 of about 90 California casinos.

If tribes decide to stop making payments, the loss of revenue would force State’s authorities to take legal measures or consider other actions, including bringing new operators to setup casinos in new locations across the state, or allowing the development of Las Vegas styled casino & resorts.

However, the possibility of competing against full-service casino operators can make tribes to reconsider not complying with the profit-sharing arrangement. For state authorities, even when California tribal casinos can reduce their payments to the State, it seems unlikely that they would stop paying altogether.